No free lunch with Kyoto

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The trouble with the almighty struggle to get the Kyoto Protocol
into force is that it's left too many people with the impression
Kyoto is the solution to climate change. It's not. Far from it.
It's a badly flawed and inadequate agreement. And that would be
true even if the United States and Australia had signed up - as
they should have.

Its first weakness is its pathetically modest objective. The
developed countries have committed themselves to reducing their
combined greenhouse gas emissions to 5 per cent less than 1990
levels. This is to be achieved by 2012.

But, though estimates of the reduction in emissions we'll need
to achieve to prevent catastrophic climate change are still
rubbery, it's likely to be nearer 50 or 60 per cent.

A second weakness is that countries have signed on with little
knowledge of the technologies that will become available to help
them achieve it, or the costs and benefits of achieving
targets.

Indeed, Nicholas Gruen, of Lateral Economics, says the costs
could change dramatically depending on the degree of economic
growth we achieve by 2012.

If technological advance is rapid and economic growth slows, the
target may be relatively easily reached. If so, we'll have wasted
an opportunity to commit to a more ambitious target.

At present, however, technical progress since the agreement was
initiated has been moderate and economic growth relatively strong.
If that continues, the cost of meeting the targets may prove too
high, prompting countries to desert the agreement.

A third weakness is that no developing country has agreed to any
restriction on its own greenhouse emissions, even at some point in
the future.

This is a gaping flaw. It will actually be in the big developing
countries - China, India, Brazil, Indonesia - that most of the
global emissions will take place over the next 20 or 30 years as
they grow rapidly to catch up with the Western standard of
living.

And not only that: energy generation and use is most inefficient
and polluting in developing countries, which means they will be
offering the easiest and cheapest opportunities for abatement.

The fact that China, India and the others will be significantly
increasing their energy use and emissions between now and 2012
means that, even if the rich countries achieve their Kyoto targets,
the global reduction in emissions will be a lot smaller than 5 per
cent.

And then there's "carbon leakage". If the rich countries are
restricting their emissions, and thereby forcing up their cost of
energy generation, you'd expect that to prompt energy production to
migrate to those developing countries where there were no
restrictions.

As a major and highly efficient exporter of fossil fuels -
particularly coal - Australia has the most to lose from carbon
leakage.

I suspect this is what John Howard means when he keeps saying
that Kyoto is contrary to Australia's economic interests and would
lead to job losses. In the most selfish and short-sighted way, he's
right.

One false impression conveyed by proponents of Kyoto is that
Australia - or any other country - could do the right thing at
little cost.

That's nonsense. In the fight to preserve or repair the
environment, there's no free lunch, and it's idle to pretend
otherwise.

One way or another, we'll be making fossil fuels a lot more
expensive.

No, the point is not to deny the costs but that the costs have
to be matched against the benefits. And even if the climate change
we averted proved to be only half as bad as the scientists are
predicting, the benefits of stopping it from happening would be
overwhelming.

But if Kyoto is so terrible, should we and the Yanks have signed
up?

Yes, of course. Why? Because you've got to start somewhere, and
Kyoto's the only game in town.